In this issue we update you with regulatory changes and review the Leicester market.
Article 4 changes
Landlords will be aware that there has been an Article 4 restriction covering certain areas of Leicester, since 2014. For those that are unaware, Article 4 is a planning restriction that prevents the creation of new HMO properties without planning permission. This is part of a nationwide trend of controlling the growth of new HMO properties.
Leicester City Council has just implemented an extended HMO Article 4 Direction, covering a greater area of the city which came into force on 17 February 2023. This will have the effect of further limiting where new HMOs can be created. We would advise checking the Council website for further information, particularly if you are looking at purchasing a property in the effected area or have plans to develop new HMO to let.
Further reading can be found here – www.leicester.gov.uk/planning-and-building/planning-applications/do-i-need-permission/planning-permission-for-houses-in-multiple-occupation
Selective licencing update
The new selective licencing scheme has been in place since October 2022 and we have had the first feedback from the Council on how the scheme is performing. According to the last update in January 2023, 379 licences have been applied for out of an estimated 9000 properties in the affected area. Out of this number, just 196 inspections have been conducted, 38 licences have been issued, with a further 19 in draft stage.
The Council have stated that they would not be issuing enforcement notices for 18 months and whilst this gives the impression that you have plenty of time to apply, landlords do need to be wary of a rent repayment order (RRO). As we have mentioned previously, tenants can apply for a RRO where a valid licence is not in place. So you could end up at a bizarre situation where the Council will not enforce action for 18 months but the Courts can and will force you to hand back rent to your tenants. The impact of this can be devasting, with courts potentially awarding tenants all of the rent back for not having a valid licence in place.
It is possible that a small cottage industry of ‘no win no fee’ lawyers will spring up to try to take advantage of this anomaly and encourage tenants to make spurious claims against landlords. Recently we had a tenant try to claim that we hadn’t protected the deposit properly and they were claiming nearly £4000 back in deposit and the 3x fine as compensation. We were able to prove that the deposit was protected but this shows that there are people who are trying to take advantage of the rules. This specific company, Copious Law, state that they are a ‘boutique law firm specialising in Landlord & Tennant (sic) Disputes and Financial Mis-selling Claims’. Unless landlords are planning to dispose of the property imminently, we would advise you to apply soon to avoid this risk.
In positive news, all the applications that we have processed for landlords have been issued with a license with either no faults or minor changes required to the property. We can make licence applications on your behalf so please let us know if you want help with this.
Investment properties available
One of our long-standing landlords is retiring and wants to sell his portfolio, either as one lot or individually. He has 5 properties, all based close to the University of Leicester campus, in the Highfields and Evington areas. We have been successfully renting these properties for many years and they all offer a good yield.
If you interested in discussing these, please get in touch and we would be happy to introduce you.
Leicester market update
We are pleased to report that we are seeing an improvement in tenant interest and bookings following 2 very tricky years as a result of the significant falls in DMU student numbers. This year, there has been an increase of 500 students enrolling at the University and whilst the overall number is still well below the 2019 peak, this is still welcome. In other positive news, UOL have had a very good year and have advised Sulets that they are projecting further growth in numbers for the 23/24 intake.
As far as Sulets numbers are concerned, overall our house sales are just ahead year on year with DMU slightly down, but UOL bookings being well ahead. Halls bookings are considerably ahead and it is likely that the cost of bills is a factor here as most halls come with utilities included and due to the oversupply, prices have generally come down.
However, one thing that has definitely changed is tenant behaviour and unlike some cities as reported in the press, in Leicester there is much less urgency to book properties immediately and students are taking their time and considering their options.
Sulets are offering bills inclusive packages to help students achieve certainty on costs and we will be pushing this further in the weeks ahead.
Overall, we expect that we will exceed last year’s sales and we believe that competitively priced, good properties, in the right location, remain very attractive. If you have any concerns about your property, please speak to either Emma Godsell or Jake Lewis who will be pleased to help.
Changes to our deposit protection process
Since the deposit protection law came into force in 2007, Sulets has always used the Deposit Protection Service (DPS) to protect tenant deposits. We chose this scheme because it was free for landlords and tenants.
We have recently started using a new tenancy software platform and one of the advantages is that the My Deposits service is integrated into the system. Like the DPS, My Deposits is a government approved provider.
When a tenant signs a tenancy with us, the software automatically collects the deposit and then moves the money direct to My Deposits. My Deposits then registers the deposit and sends out the statutory notice to the tenants. This is seamless and automatic but the important part is that there is no chance for human error where a deposit could inadvertently be missed resulting in non-compliance with the rules.
As stated above, there is always a chance that a tenant could try to make a claim so we have decided that this new integrated scheme is safer for landlords and it is worth bearing in mind that the landlord is liable so if you have property listed with other agents, you may want to check how secure their deposit process is.
We have started moving all deposits onto the new service and will move existing deposits onto the new platform in the coming weeks. For our managed landlords, this won’t really have any impact. We will still deal with all aspects of the deposit collection and return process. For our few Let Only landlords, the change will mean that you will need to open a My Deposits account so we can transfer the money to you. Your property manager will be in contact about this soon.
You can be safe in the knowledge the new system will ensure that the deposit is collected and registered properly meaning there is no risk to you.
Changes to our terms of business
We have made some changes to our Terms of Business and will be sending these out to you going forward. The main change is that the agreement is now split into two parts:
- Part A is specific to you. This will come to you via StuRents for you to read and sign. Part A also includes the quotation.
- Part B is the standard terms. These can be found here. The main change to this is Item 7.5: –
7.5 If the Contract is for the Let-Only Service or the Managed Service, the Agent will sign the Tenancy Agreement on the Landlord’s behalf.
We have made this change because our lettings software has a Book Now option for the tenants to apply directly. If the tenant(s) use this option, the tenancy agreement comes back to Sulets to sign and cannot be sent on to the landlord.
Going forward, your Lettings Negotiator will call you to discuss rents for the next lettings season, then we will send out Part A for you to agree and sign. This will happen in early to mid-September so we are ready to launch on 1 November.